Recent Comments

Archives

Categories

Meta

Dell offers to take the company private for $13.65 per share

On June 22 1988, Dell offered of 3.5 million shares at $8.50 a share at the initial public offering. From 1995 to 1999, I watched from the sideline as many people got rich as Dell stock doubled in price every six months. Dell never paid a dividend, but with the stock price doubling, there was plenty of incentive to buy Dell stock. Finally, in 1999, after the 2 for 1 stock split on Mar 8, 1999, I purchase some Dell stock at around $40 per share. It was a mistake, since the tech bubble burst in 2000 and I never got my money back. After holding the stock for five years, I could gotten my money back, if I had sold in 2005, but I did not–that opportunity only lasted a few months. I have held shares in Dell since 1999, and if the deal goes through, I will be forced to sell at a significant loss. By the way, Dell has paid four $0.08 dividends, starting September 27, 2012.

After working at Dell for about a year in mid-2000, I was amazed at how ruthless the leadership was in hiring short-term contractors and in terminating long-term employees. At the time, I was thinking that the leadership was protecting the shareholders at the expense of employees, but now I am thinking that the leadership at Dell does not care about shareholders.

There was supposed to be a vote on the buyout offer on July 18, 2013, but after counting the votes, the leadership discovered that the offer would have been rejected. So, they delayed the vote. Obviously, the shareholders are not happy with the latest attempt of the Dell leadership to enrich themselves at the expense of the shareholders. Icahn and Southeastern Asset Management partners have offered $14 a share in cash, plus one warrant for every four shares tendered. The warrant would give shareholders the right to buy one Dell share for $20 in the next seven years. Why isn’t there a vote on that offer?

So, if the leadership at Dell does not care about employees and if they do not care about shareholders, whom do they care about? I suspect that they only care about self enrichment at the expense of everyone else. Is this capitalism at its best? I think not.